Smells Like Shoe Polish

My friend and flatmate in my 4th year of university was a geology student. His department had given him some tickets for a dinner and lecture on geology at some geological club in Toronto. Always interested to learn about something I know absolutely nothing about, I jumped at the chance to go.

The keynote speaker raved about how gold was foolishly cheap, and should have been twice the price that it was. It was an interesting talk, and had I listened to that geologist, I would have made out all right (not accounting for inflation or exchange rates). Take a look at this. It was 1999, and gold was about $250 an ounce.

I have never pretended to understand our infatuation with gold. I understand it now to be another currency, yes, but what makes it desirable?

Gold has a long history of being something we associate with wealth. Empires in Mexico, India, Europe and others… they have all sought after it. It’s history is nearly as interesting as that of salt.

To tell you the truth, I don’t even like gold really. Sure, I would like to own a bar to use as a doorstop or a wafer to use as a paperweight, but that would just be to be eccentric. Gold jewelery has always seemed Gaudy to me. My wife’s engagement ring, and our wedding bands are platinum. Simple. Stylish. Hard.

Yet gold keeps moving higher, and recently some things have happened that make me wonder if it’s possibly on its way back down.

I’ve lived here in Japan for 9 years, and starting last year a commercial started running that made me cringe. The commercial is selling a class and system to trade and make money from gold. The people in the commercial look very happy after walking out of the class, and then it cuts to them in front of a computer screen in their living room, smiling as they (I assume) buy and sell gold futures.

(This seems to have replaced a similar commercial that used to run, which promised to teach you how to make money in the F/X market.)

But the real reason I will continue to stay away from gold came last evening when a door-to-door gold buyer showed up at my door.

He was wearing a yellow jacket, and asked if I had any gold I wanted to sell. I said no, and he took a step to try to stop me from closing the door. He showed me a flier with various examples of gold jewelry and asked “Don’t you have anything like this that you want to sell?” I said no, and he asked again if I didn’t have anything like it in the house, to which I answered “I’m poor. I have no jewelry.”

Aside from the fact that I wouldn’t tell a complete stranger if I had jewelry in the house or not, the concept of door-to-door gold buying floored me. Has it come to the frenzy that pawn shops are willing to send a workforce out into the community in search of gold?

That tells me something. It tells me that pawn shops believe that gold will continue to increase, so they are willing to go out to buy gold at today’s price with the expectation that they will be able to sell it even higher next week or next month.

And that tells me something else. If there are commercials advertising how you can make money in gold, and pawn shop dealers showing up at my door, well, to me that’s about the same as a shoe-shine boy telling me to buy stocks. It’s advice that stinks, and will leave you with a headache if you stick around too long.